Bitcoin “Not Manipulable by Any Government”

This week, following the scheduled leave of John F. Kelly, United States President Donald Trump has chosen the pro-Bitcoin Mick Mulvaney to serve as the acting White House Chief of Staff beginning 2019.

In 2016, Mulvaney reportedly said that the Federal Reserve “effectively devalued the dollar” and emphasized that the exercise of such control is not possible with a cryptocurrency like Bitcoin that is “not manipulable by any government.”

Is it Good For Bitcoin?

Having a high profile official and an influential member of the Trump administration is certainly positive for the long-term growth of the asset class.

The presence of pro-Bitcoin and crypto officials in the U.S. government, however, could encourage other government officials to evaluate cryptocurrencies in a neutral way and analyze the benefits that the decentralized financial systems can bring.

In Sept. 2017, the central bank of Finland, for instance, released a research discussion that explicitly described the inefficiency of regulating blockchain protocols. The research concluded that Bitcoin is not and cannot be regulated because the protocol operates under strict rules implemented by the community sustained by miners, developers, and node operators.

“Bitcoin is not regulated. It cannot be regulated. There is no need to regulate it because as a system it is committed to the protocol as is and the transaction fees it charges the users are determined by the users independently of the miners’ efforts. Bitcoin’s design as an economic system is revolutionary and therefore would merit an economist’s attention and scrutiny even if it had not been functional. Its apparent functionality and usefulness should further encourage economists to study this marvelous structure.”

As seen in the paper of the central bank of Finland, it is possible for a central bank or a government to analyze the structure of Bitcoin in a neutral manner and create practical regulatory frameworks around it without restricting the growth of companies in the industry.

Currently, in regards to Bitcoin and even Ethereum, the SEC has clarified that Bitcoin is not considered a security under existing laws, essentially approving the infrastructure surrounding it.

Over the past several months, the SEC in the U.S. and other authorities in the global market have been primarily working on the integration of strict Know Your Customer (KYC) policies to eliminate money laundering in the cryptocurrency market.

Neutral Evaluation

The existence of a high ranking government official in the U.S. government that understands the purpose of digital currencies could have a long-lasting effect on the cryptocurrency industry and could encourage others to evaluate the asset class under a different light.

However, as the New York Post reported on Dec. 16, Mulvaney once described President Trump as “a terrible human being,” triggering political analysts to question how long the new chief of staff can remain in office.